Galasso said the plan would allow 85 percent of the about 10,000 payees to receive 100 percent of the present value of their annuity benefits. The remaining 15 percent would received varying degrees of their annuities, although none of them would receive 100 percent.

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Jeanice Dolan, a Maryland resident who testified at the rehabilitation hearings, said she would see a 47 percent reduction in her annuity as part of the liquidation.

“I don’t know how I’m going to pay for these crazy health insurance premiums,” Dolan said. “It’s a huge part of my monthly income and I don’t know if I can make it on a reduced income.”

The liquidation plan could hurt Daniel Malin, a Manhattan attorney, even more. He said he stands to lose 60 percent of his structured settlement annuity under the liquidation plan. Malin was injured in an accident as a child and became legally blind.

“The superintendent and the governor just want this to go away,” Malin said. “They were just trying to get this plan approved as quickly as possible. We had virtually no time to actually analyze what they were proposing and get the proper experts.”

Edward Stone, an attorney representing eight payees who stand to lose money in the liquidation, said Galasso was being fed misinformation about the fates of payees if he didn’t approve the superintendent’s plan.

“I don’t think the judge is a bad guy,” Stone said. “I think he’s being told that annuitants will get less if he doesn’t approve it, which isn’t true. For years, the assets of this company were squandered. Nobody ever validated the information that gave rise to (Executive Life’s) insolvency.”

Executive Life began experiencing financial difficulties more than 20 years ago. In order to protect its payees, the then-superintendent of Insurance for New York state petitioned to have the company declared subject to rehabilitation, and took over responsibility for the company as its rehabilitator.

Recently, due to the economic downturn, the superintendent determined rehabilitation was no longer a viable option. As of Dec. 31, Executive Life reported liabilities exceeded reported assets by $1.5 billion. An application for an order of liquidation was submitted, which Galasso granted today, designating Lawsky as the liquidator.

As part of the plan, each payee will receive about one-third of the current value of its annuity benefits as part of the Executive Life’s $900 million-plus estate. Forty participating state guaranty associations will cover the difference between the one-third estate asset allocation and the preset state cap for residents, making up about $700 million. An additional $171 million is being made available through hardship funds of other life insurance companies.

“It bears mentioning again that if this plan is not approved there could be no prefunding or voluntary enhancements of any kind offered in the future,” Galasso said. “Moreover, if the court were to delay this decision for any reasons the value of ELNY’s assets will most likely diminish, resulting in a reduced pro rata share.”

Attorneys for the superintendent’s office did not immediately respond to requests for comment.

One comment

I believe this is correct. I also believe this is the kind of plan that we are likley to end up with, though somewhat less generous as it will be forced on us by our creditors who won’t give a hair about healthcare for seniors and the needy. Read “Penny Health” articles if you dont have insurance.